BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2013-2014 Regular Session
AB 2494 (Cooley)
As Amended June 16, 2014
Hearing Date: June 24, 2014
Fiscal: Yes
Urgency: No
RD:rm
SUBJECT
Courts: frivolous actions or proceedings
DESCRIPTION
This bill would effectively authorize a trial court to award
reasonable expenses incurred as a result of bad-faith actions or
tactics that are "frivolous" or solely intended to cause
unnecessary delay by deleting language that currently limits
that authorization to actions or tactics arising on or before a
complaint or proceeding on or before December 31, 1994.
This bill would require that any sanctions imposed pursuant to
this provision be imposed consistently with the standards,
conditions, and procedures set forth under existing law. This
bill would also exempt disclosures and discovery requests,
responses, objections, and motions from these provisions.
This bill would sunset on January 1, 2020.
BACKGROUND
Federal Rule of Civil Procedure (FRCP), Rule 11, which applies
to federal court proceedings (except for disclosures and
discovery requests, responses, objections, and motions),
requires that every pleading, written motion, and other paper be
signed by at least one attorney of record in the attorney's
name-or by a party personally if the party is unrepresented, as
specified. The rule provides that by presenting to the court a
pleading, written motion, or other paper-whether by signing,
filing, submitting, or later advocating it-an attorney or
unrepresented party certifies that to the best of the person's
(more)
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knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances: (1) it is not being
presented for any improper purpose, such as to harass, cause
unnecessary delay, or needlessly increase the cost of
litigation; (2) the claims, defenses, and other legal
contentions are warranted by existing law or by a nonfrivolous
argument for extending, modifying, or reversing existing law or
for establishing new law; (3) the factual contentions have
evidentiary support or, if specifically so identified, will
likely have evidentiary support after a reasonable opportunity
for further investigation or discovery; and (4) the denials of
factual contentions are warranted on the evidence or, if
specifically so identified, are reasonably based on belief or a
lack of information. (FRCP Rule 11(b).) If, after notice and a
reasonable opportunity to respond, the court determines that
this rule has been violated, the court may impose an appropriate
sanction on any attorney, law firm, or party that violated the
rule or is responsible for the violation, as specified.
As reflected in the Advisory Committee notes to the 1993
amendments to Rule 11, "the purpose of Rule 11 sanctions is to
deter rather than to compensate" - hence the requirement that
any imposed monetary sanction should ordinarily be paid into
court as a penalty. "However, under unusual circumstances,
particularly for (b)(1) violations, deterrence may be
ineffective unless the sanction not only requires the person
violating the rule to make a monetary payment, but also directs
that some or all of this payment be made to those injured by the
violation. Accordingly, the rule authorizes the court, if
requested in a motion and if so warranted, to award attorney's
fees to another party."
In 1994, California adopted the requirements set forth in FRCP
Rule 11 and applied those requirements to cases filed on or
after January 1, 1995. For cases filed on or before December
31, 1994, the prior statute (Code of Civil Procedure Section
128.5) continued to apply and permitted a trial court, after
notice and hearing, to order a party to pay reasonable expenses,
including attorney's fees incurred by another party as a result
of bad-faith actions or tactics that are frivolous or solely
intended to cause unnecessary delay. "Frivolous," for these
purposes, is defined to mean totally and completely without
merit, or for the sole purpose of harassing an opposing party.
This bill, sponsored by the Civil Justice Association of
California, would delete the December 31, 1994 limitation on a
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trial court's authorization to award reasonable expenses
incurred as a result of bad-faith actions or tactics that are
"frivolous" or solely intended to cause unnecessary delay. This
bill would require that any sanctions be imposed consistent with
the standards, conditions, and procedures set forth under the
California's version of FRCP 11. Finally, this bill would
exempt disclosures and discovery requests, responses,
objections, and motions from these provisions.
CHANGES TO EXISTING LAW
Existing law provides that, subject to specified limitations, a
court may impose sanctions and punitive damages on an attorney,
law firm, or party who presents a paper to the court: (1) that
is presented primarily for an improper purpose; (2) that
contains claims, defenses, or other legal contentions
unsupported by either existing law or a non-frivolous extension
of existing law; (3) that contains allegations or factual
contentions that do not have evidentiary support and are not
likely to have evidentiary support after a reasonable
opportunity for discovery; or (4) that contains denials of
factual contentions that are not supported by evidence or
reasonable information and belief. If, after notice and a
reasonable opportunity to respond, the court determines there
has been a violation of this section, the court may, subject to
the conditions stated below, impose an appropriate sanction upon
the attorneys, law firms, or parties that have violated this
section or are responsible for the violation. In determining
what sanctions, if any, should be ordered, the court shall
consider whether a party seeking sanctions has exercised due
diligence. (Code Civ. Proc. Sec. 128.7.)
Existing law provides that a sanction imposed for violation of
the above shall be limited to what is sufficient to deter
repetition of this conduct or comparable conduct by others
similarly situated. Subject to specified limitations, the
sanction may consist of, or include, directives of a nonmonetary
nature, an order to pay a penalty into court, or, if imposed on
motion and warranted for effective deterrence, an order
directing payment to the movant of some or all of the reasonable
attorney's fees and other expenses incurred as a direct result
of the violation. (Code Civ. Proc. Sec. 128.7.)
Existing law provides that a motion for sanctions brought by a
party or a party's attorney primarily for an improper purpose,
such as to harass or to cause unnecessary delay or needless
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increase in the cost of litigation, shall itself be subject to a
motion for sanctions. It is the intent of the Legislature that
courts shall vigorously use its sanctions authority to deter
that improper conduct or comparable conduct by others similarly
situated. (Code Civ. Proc. Sec. 128.7.)
Existing law provides that the above provisions shall apply to a
complaint or petition filed on or after January 1, 1995, and any
other pleading, written notice of motion, or other similar paper
filed in that matter. (Code Civ. Proc. Sec. 128.7.)
Existing law authorizes every trial court to order a party, the
party's attorney, or both to pay any reasonable expenses,
including attorney's fees, incurred by another party as a result
of bad-faith actions or tactics that are frivolous or solely
intended to cause unnecessary delay. Existing law provides for
relevant definitions and defines "frivolous" to mean (1) totally
and completely without merit, or (2) for the sole purpose of
harassing an opposing party. Existing law definition of
"actions or tactics" is limited to the making or opposing of
motions or the filing and service of a complaint or
cross-complaint only if the actions or tactics arise from a
complaint filed, or a proceeding initiated, on or before
December 31, 1994. (Code Civ. Proc. Sec. 128.5(a)-(b).)
Existing law provides that expenses can only be imposed on
notice contained in a party's moving or responding papers; or
the court's own motion, after notice and opportunity to be
heard. An order imposing expenses must be in writing and shall
recite in detail the conduct or circumstances justifying the
order. (Code Civ. Proc. Sec. 128.5(c).)
Existing law provides, in addition to any award for conduct
described above, the court may assess punitive damages against
the plaintiff upon a determination by the court that the
plaintiff's action was an action maintained by a person
convicted of a felony against the person's victim, or the
victim's heirs, relatives, estate, or personal representative,
for injuries arising from the acts for which the person was
convicted of a felony, and that the plaintiff is guilty of
fraud, oppression, or malice in maintaining the action. Existing
law provides that the liability imposed by this provision is in
addition to any other liability imposed by law for acts or
omissions within the purview of this section. (Code Civ. Proc.
Sec. 128.5(d)-(e).)
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This bill would amend the above provisions to delete the
December 31, 1994, limitation on a trial court's authorization
to award reasonable expenses incurred as a result of bad-faith
actions or tactics. This bill would provide that the
authorization does not apply to disclosures and discovery
requests, responses, objections, and motions, and would provide
that any sanctions imposed pursuant to this section shall be
imposed consistently with the standards, conditions, and
procedures set forth in specified provisions of Section 128.7,
above.
This bill would sunset on January 1, 2018, and would require, on
or before June 30, 2018, that the California Research Bureau
submit a report to the Legislature examining the impact and
effect of this act.
This bill would make other technical and nonsubstantive changes.
COMMENT
1. Stated need for the bill
According to the author:
Unfortunately, bad-faith disobedience and tactics by either
side are needlessly employed in litigation. It can result in
clogging our courts and wasting precious judicial resources.
Courts routinely give litigants the benefit of the doubt, but
they have lost an important tool used to ensure bad faith
actions that can materially harm the other party or the
fairness of a trial are discouraged. Under existing law a
court can compel obedience with a court order, but financially
the most a court can do if a party violates one is find them
in contempt with a penalty of up to $1500. Moreover, if a case
ends in a mistrial or in the release of protected documents it
is difficult to undo the waste of judicial resources or harm
done to the litigant who was not at fault.
AB 2494 would merely reestablish a limited section that had
previously provided another judicial tool to reduce bad-faith
activity in litigation. The bill would retain the extremely
high proof required for such awards[;] therefore, its
applicability would only lie with the truly egregious
behaviors.
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This bill would help provide all litigants- both plaintiffs
and defendants- some relief in limited cases, thereby
protecting litigants and California's courtrooms from costly
and unwarranted behavior.
The sponsor of this bill, the Civil Justice Association of
California, adds: "Our legal system requires attorneys to
zealously advocate on behalf of their clients. This bill
continues to encourage both sides to zealously advocate, while
reinstating a deterrent to reprehensible tactics in litigation.
Awards would only be made if the behavior was not only
meritless, but also made in bad-faith (Dolan v. Buena Engineers,
Inc., 24 Cal.App.4th 1500 (1994)). This is a very high standard
and courts are mindful that sanctions should be used sparingly
in the clearest of cases to deter the most egregious of conduct
(In re Marriage of Flaherty, 31 Cal.3d 637 (1982)). While AB
2494 will not eliminate all bad conduct, it will certainly
dissuade some of the worst conduct. Any reduction of such
activity will reduce the burdens to all who use and need
California's judicial system."
2. Bill grants judges greater authority to assess sanctions
for the filing of frivolous motions and lawsuits
As noted in the Background, in 1994, AB 3594 (Weggeland, Ch.
1062, Stats. 1994) was enacted to adopt in California a federal
rule of civil procedure relating to sanctions (Rule 11). At the
time, California had a separate provision relating to frivolous
actions, Section 128.5, that permitted a trial court, after
notice and hearing, to order a party to pay reasonable expenses,
including attorney fees incurred by another party as a result of
bad-faith actions or tactics that are frivolous or solely
intended to cause unnecessary delay. In justifying the adoption
of Rule 11 in this state, the proponents of AB 3594 argued that
sanctions for frivolous lawsuits provided under California's
Code of Civil Procedure, Section 128.5, were "too lenient."
(See Sen. Judiciary Com., analysis of AB 3594 (1993-1994 Reg.
Session), Aug. 16, 1994, p. 3.) However, AB 3594 not only
adopted Rule 11 as Code of Civil Procedure Section 128.7, but it
also limited the application of Section 128.5 for those filings
or proceedings initiated on or before December 31, 1994.
Accordingly, this bill now seeks to remove the December 31,
1994, limitation on Section 128.5, thus, providing courts with
an additional "judicial tool" to address bad-faith tactics. As a
practical matter, that additional tool is the pre-1994 standard
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that was phased out due to concerns that it was "too lenient."
Courts would have the option of either using the FRCP Rule 11
standards or the revived older standard to address bad faith
tactics. To evaluate the effectiveness of the proposed revival,
this bill includes a January 1, 2018, sunset date that would
allow the Legislature to revisit this issue and determine
whether this change has any impact on litigation in this state.
In support of this bill, a coalition of supporters writes that
"[a]lthough the Code of Civil Procedure Section 128.7 allows
sanctions for frivolous filings, it does not apply to bad-faith
tactics, such as deliberately violating a court order that may
prejudice a party at trial. Assembly Bill 2494 would revive a
previous code section that allowed sanctions for egregious
behavior when a party shows that not only was the action
objectively unreasonable, but also where that person had an
improper motive." The coalition adds that while our legal
system requires that attorneys zealously advocate on behalf of
clients, "an attorney has, as an officer of the court, a
paramount obligation to the due and orderly administration of
justice. It is vital to the integrity of the legal process that
attorneys strive to maintain the highest standard of ethics,
civility, and professionalism in the practice of law."
3. Report date
As currently drafted, this bill requires the California Research
Bureau to submit a report to the Legislature by June 30, 2018,
examining the impact and effect of this act. To allow the
Legislature time to review the report before the expiration of
the bill's sunset, the following amendment is suggested to
require the report one year in advance of the sunset.
Suggested Amendment :
On page 4, line 31, strike "June 30, 2018" and insert "January
1, 2017"
Support : American Chemistry Council; Associated Builders and
Contractors of California; Association of California Insurance
Companies; California Building Industry Association; California
Association of Health Facilities; California Business Properties
Association; California Chamber of Commerce; California Farm
Bureau Federation; California Grocers Association; California
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Hotel and Lodging Association; California Retail Association;
California Manufacturers and Technology Association; Citizens
Against Lawsuit Abuse; National Federation of Independent
Business; The Doctors Company; San Diego County Apartment
Association; Sempra Utilities; U.S. Chamber Institute for Legal
Reform
Opposition : None Known
HISTORY
Source : Civil Justice Association of California
Related Pending Legislation : None Known
Prior Legislation :
AB 1891 (Niello, 2008) would have revised the standards by which
conduct during and outside of civil litigation is subject to
penalty, as well as the scope of conduct that is subject to
sanction, and the types of penalties that are to be imposed.
Among other things, the bill would have required the court, if
it finds that an attorney has engaged in any filing, action, or
tactic that is frivolous, clearly unjustified, or otherwise
substantially devoid of merit when considered in the context of
the tactic taken or position asserted and the facts and material
issues of the particular case, to report each instance and
finding to the State Bar of California. This bill failed
passage in the Assembly Judiciary Committee.
AB 3594 (Weggeland, Ch. 1062, Stats. 1994) See Background and
Comment 2.
Prior Vote :
Assembly Floor (Ayes 78, Noes 0)
Assembly Appropriations Committee (Ayes 17, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
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